Britain Is Now 'Cash Rich'

With The Healthiest Bank Balances For Half A Century, British Businesses Are Now 'Cash Rich'


Steven Beahan, Partner | +44 (0)114 294 7868

Following the hard-hitting financial recession, British business is firmly back on track in terms of its economic status, according to analysis from an industry leader.

The Telegraph reports how "remarkable" analysis from global banking firm Citigroup indicates that the UK is now 'cash rich', with business balance sheets at their healthiest for half a century.

This is despite the financial struggles of recent times, showing that Britain's economy is now well on its way to recovery, which has led to businesses finding themselves with an abundance of cash.

Figures from Citigroup show the value of cash in corporate bank accounts increased significantly during June, with growth of 8.8 per cent when compared to the same month in 2013. This marks the biggest rise since May 2007.

In addition, cash buffers held by companies in the country are now at 77.1 per cent of the value of firms' bank debt, which is the highest level ever recorded. Last year, the statistic was 69.3 per cent, while at the peak of the economic crisis in 2008, the figure was just 45.2 per cent.

In the Telegraph piece, deputy editor of the newspaper Allister Heath commented: "If we want jobs and growth, we need British businesses to spend and hire - and for that, we need a healthy, profitable corporate sector."

One way in which firms could achieve this growth is by choosing to spend their cash overseas rather than at home, which would allow for customer bases to potentially increase, while also growing the profile of brands.

In light of this, the government is being called on to pay more attention to improving the UK's general business climate, as well as to do more to increase its economic competitiveness.

Mr Heath also predicts merger and acquisition activity will become more prevalent due to this influx of cash, while greater investment in factories, offices and IT departments could be seen in the near future.

Consumers have also contributed to Britain's 'cash rich' position, as despite still owing significant sums to banks and credit card providers, the overall level of debt owed has decreased dramatically in recent months.

Expert Opinion
After months of research suggesting that the tide had turned for British businesses, we’ve subsequently seen a number of studies go on to outline that such companies are now in a prime position to grow and develop their offerings.

"This is the latest report to suggest this, with it making significant claims regarding the assets that many companies now have at their disposal. While this is of course good news, it is important to remember that it is not necessarily the funds that a business has which matters the most – but rather how they make use of them.

"So many businesses will be assessing their next steps for the coming months and it is vital that they take care to consider the best avenues for growth. We would urge companies to talk to legal advisers to also ensure future plans comply with core regulations, as well as to get access to vital expertise on a range of core business matters."
Steven Beahan, Partner